Answer

Thanks for the question.

First, call your 401k provider and ask to take a loan for half of the balance. They may or may not allow this, but it is common with plans. You will pay yourself back the interest. It's a good deal. Assuming they allow this, you would need to come up with roughly $22,000 from another source to make the purchase.

Now, if that's not an option with your carrier, or coming up with the additional funds is not an option, I would reccomend cashing the 401k. Many financial pundits advise never break your 401k or IRA until you reach 59 1/2. But, what they don't mention is that the best investment is to invest in yourself........ie, a new business.

 

I agree that breaking the 401k to purchase the business would be a good idea.

Now, keep in mind that you will incurr a 10% penalty by cashing the 401k early. But, you're easily going to make up for that with the new business, especially with cash flows at $188k yearly.


Regards.